“It seems like only yesterday that Apple was trading around $130 and I was writing about how AAPL stock could hit $200,” Will Ashworth writes for InvestorPlace. “Well, trading within 6% of $200, I’ve decided to up the ante. Unlike $200, which has been a surprisingly tricky hurdle, hitting $400 within the next 36 months could come more easily.”
However, to do so, it’s going to need the help of these five things:
1. Services Revenue
2. Apple Retail Stores
3. Bringing iOS closer to macOS
4. Emerging Markets
5. The iPhone
“Over the past five years, AAPL stock has achieved a total annualized return of 27.2%. For Apple stock to get to $400 within 36 months, it has to generate 29% annual returns,” Ashworth writes. “That’s a very tall order indeed.”
Ashworth writes, “To get there, the iPhone can’t have a letdown and emerging markets have to keep growing profitably.”
Read more in the full article here.
MacDailyNews Take: From Will’s lips to Mr. Market’s ears.
It might be eventually $400 probably in 10 years time.
Total clickbait
The original article certainly was. There was a lot of broad statements with in the facts of facts to support them.
First, Services isn’t growing as fast as Hardware. Hardware includes Apple Watch, Apple TV, HomePoc, AirPods, Beats headsets and a bunch of other smaller items. I’m looking for continued average growth in Hardware exceeding 20%.
Second, nothing was mentioned about Apple original content or the future monetization of AR enhancements to Mac, iPhone, iPad and original content. Original content with AR enhancement will easily drive Services revenue at a 25% clip. Then there is the rapid growth of Apple Music. Paid subscripts in the US passed those of Spotify (who has a 16 year head start on Apple). ITunes comes standard on Macs, iPhones, iPads and HomePods. Eventually Apple Music will overtake Spotify’s worldwide leadership.
Third, Apple has today about $160 Billion in cash above its goal of being cash neutral and is generating >$40 Billion in surplus cash each year. Share buyback budget is going to double (already history’s biggest buyback program), not to mention Apple’s dividend rate.
With all this going for Apple, continuing to grow AAPL at a 25+% rate will not be that hard. Oh, and a bit of a correction to the authors article. AAPL has been averaging 25% annual growth since FY2011, that’s 7 (nearly 8) years not just 5.
The only way that AAPL can hit $400 is if the stock price goes much higher than it is now.
Gee, y’think? 🙂
Yeah, but what’s the head room? Where’s the innovation. Apple’s services will continue to generate revenue at a pretty good clip and emerging markets will be there too. However, at some point there needs to be new growth from R & D and innovation, which Apple has been stagnant on for nearly five years now.
Tech investors tend to be finicky about the ‘next thing’, which Apple hasn’t really been producing. Though they’ll grow and continue to show growth, they may not have the same rate of growth as predicted with what they’ve been showing of late.
Not stagnant. Simply silent. Ever increasing R&D expenditures say that something is going on.
Even more than the help of those five things, APPL needs to avoid becoming collateral damage in a trade war.
Apple could hit $400 a share just by updating their products in a timely fashion and prevent people from jumping ship.
You mean like updated Macs and such without years and years of lag in between? Why change now?
Well Microsoft , Goog have PEs of near 30..
Give Apple that and we will be almost there instantly!
Why is Apple Pe so much lower?!
Market’s confidence in the management vision and modest revenue growth and sustainability..
Unlike Goog or MS … Apple seems to like to leave the market hanging from its nails! ( over the top secrecy to no avail )
Zero reason for all that other than complacency .. Ego.. IMO
or maybe it is truly incompetence???.. .. but im still holding my breath before i totaly join that camp.
Apple is still 10% of the computing market and has practically ZERO footprint in enterprise. Shit if they just went for more than the 10% market share that they have with every product they put out they’d get to $400
Maybe the reason Microsoft has a PE of 30 is because they own 90% of enterprise.
There are no signs of Apple doing ANYTHING innovative or even common sense upgrades or going for common sense markets.
Last holiday season every commenter on this board was calling for Timmy’s head. big deal, with buy backs he beat the street, he still produced nothing. We’re staring at “Back to School” and the holidays again with nothing.
Get rid of that twinkle toes douche.
What’s the new headquarters for? NC? Thats the signs of a Fat Cat.
If Apple’s stock price goes to $400 then Amazon’s stock price will be around $4000 which is far more likely. Why is that the FANG companies can fully monetize everything they do so easily and yet Apple struggles to find things to make money from. It’s going to be a dark day when a company like Facebook becomes more valuable than Apple. It just seems as though Apple is standing still while other companies are pushing forward. Spending hundreds of billions on stock buybacks really seems like such a waste when there must be decent acquisitions available. Apple is certainly not going to make that $1T market cap this year at the rate the stock is moving.
I’m not saying that I’m smarter than Tim Cook or anything that arrogant. I just don’t understand why Apple with all its resources is playing second fiddle to Google. Why is such a simple thing like updating its desktop and laptop product line in a timely fashion a problem for Apple? It’s not as though they’re building cutting-edge, ultra-gaming machines for consumers.
I’m just ranting because I can’t figure out Apple anymore. That MacBook keyboard fiasco is just ridiculous. Spending hundreds of dollars just to replace a few faulty keys. Apple is deliberately designing its products to be an expensive pain to fix.
The most profitable company in the history of the world struggles to find things to make money on?
The difference between Apple and the FANG stocks is that for some reason wall street insists that Apple actually makes money, yet doesn’t seem to care about that for the FANGs. They tell their BS stories to the analysts and Wall Street keeps shoveling money at them (i.e. one quarter of Apple earnings is more than the net total profits for the entire existence of Amazon). Amazon is only profitable now because of AWS, despite the tens of billions that has been spent by Amazon for distribution infrastructure for physical goods. Yet what happens to Apple stock price if their profit margin drops 1% in a quarter and they still make a seven or eight billion dollar profit? Stock tanks and wall street says they are going out of business. I’ve never been able to figure out the difference in how Apple is treated from pretty much every other company in tech.
Tim Cooks legacy will not be record quarterly profits but missing key innovations by being timid and late
-Music streaming – 4 years late and a luster product.
-AI- 4 and 5 years ahead of Amazon and Google. Now that many years behind
-Movie Streaming- 4 years ahead of Netflix on rent to stream
-Cloud- 4 years again late. Current offer is lacking
Tim Cook was a caretaker and CEO World Issues Celebrity. While the tech world continued to innovate and power forward.
The lack of innovation so many complain about is here on this forum. The same people claim over and over that Apple isn’t innovating, that everybody else’s products are better, then ignore that the market (ordinary people, not just compulsive complainers) are driving Apple’s revenue growth upward ar a 25% annual rate. A dozen complainers here do not speak for the people that bought ~4 Million Macs, ~78 Million iPhone (with an average selling price 3X that of the Android world), grew Apple Music subscriptions by 20 Million since December 2011, made Apple Watch the dominant smart watch worldwide, and so on, in just the last quarter.
Yeh sure it will when the US economy goes into recession in next 12-18 months and the Bond matket collapses.
Does this guy who wrote artical not know the current state of thw world economy!!
And when Jonny has had enough of creating new emojis & decides to quit, the stock will drop $200!